Honestly this shouldn't even need to be said. But of course it does have to be, over and over again.
https://twitter.com/paulkrugman/status/1357697390644506634
To clarify/amplify @paulkrugman's point: in a normal recession, the goal of stimulus is to raise people’s incomes in order to boost spending and raise employment, until we get back to whatever we think full employment is.
But right now, while we want that to some extent, we also want to raise people’s incomes so they do *not* have to go back to work. It’s much more feasible to close restaurants for instance if the workers are getting $1,400 checks and enhanced UI benefits.
Insofar as the goal is to allow people to have an adequate income without going to work at jobs that would contribute to the spread of the coronavirus, a successful package will *lower* measured GDP. Totally different from a normal stimulus.
It makes no sense to compare the relative size of the spending package and estimated output gap now vs 2009 or whenever, because the goal then was to raise employment while the goal today is in large part to maintain incomes without having to raise employment.
Of course it's also important that the output gap is almost certainly quite a bit bigger than the official estimates, as @rortybomb and I argued here: rooseveltinstitute.org/2021/02/01/sti… Plus there are major benefits for distribution, productivity growth, etc in running economy hot.
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